Calif. Judge Voids $600M Water Privatization Contract

A San Joaquin County, Calif., judge decided Friday to rescind a $600-million water privatization contract that a corporation had hoped would pave the way for similar partnerships in cities across the country.

The largest of its kind in the western United States, the contract would have transferred the costs of upgrading the city's aging sewer pipes and treatment plants to OMI-Thames Water  a joint venture of American and British firms.

But three groups  the Concerned Citizens Coalition, the Sierra Club, and the League of Women Voters  sued the city in March, arguing that city leaders should have paid more attention to the 20-year contract's environmental impacts before signing it.

"The city proceeded recklessly, knowing that they were in violation of (state environmental laws)," said Diane Park, policy director for the League of Women Voters' San Joaquin County Chapter.

The judge gave Stockton leaders six months to "wind down the relationship" that started Aug. 1, when the city handed control of its water, wastewater, and stormwater systems to OMI-Thames.

City officials hoped that the privatization of its water utilities would save the city $100 million over the next 20 years. The city and OMI-Thames may still appeal the decision to a court of appeal in Sacramento.

If the ruling stands, Stockton voters will have to approve any new contract.

City voters approved an initiative in March giving them the final say on any deal worth more than $5 million.